Tuesday, November 4, 2008

Lilly to Take 1.4 Billion Charge for Zyprexa Probe

This story sat in my inbox for a while as did the one above but they are both worthy of posting .. sorry for the delay..

By Ed SilvermanOctober 21, 2008

The drugmaker is in “advanced discussions” to settle a long-standing criminal investigation into its marketing of the antipsychotic. The disclosure comes just two weeks after Lilly settled an 18-month probe with 32 states, which contended Lilly violated consumer protection laws by urging docs to prescribe Zyprexa to patients who did not need the drug (back story).

Today, Lilly says it has “incorporate an enhanced compliance program,” which includes guidelines issued by the US Department of Health and Human Service’s Office of Inspector General. “The government’s investigation…has been ongoing for five years and we now have a heightened sense of responsibility to all our stakeholders to intensify efforts to resolve these issues,” Robert Armitage, Lilly’s senior vp and general counsel, says in a statement.

The investigation by the US Attorney in Philadelphia began in 2004 and last November, Lilly received a grand jury subpoena. Meanwhile, the State Medicaid Fraud Control Units of more than 30 states coordinated its investigation with the feds into Medicaid-related claims concerning Zyprexa marketing. However, 11 other states - Louisiana, Mississippi, Montana, New Mexico, Pennsylvania, South Carolina, Utah, West Virginia, Connecticut, Arkansas and Idaho - have filed lawsuits over Zyprexa and are not participating in the coordinated probe.

In its statement, Lilly says that, if the ongoing discussions are successfully concluded, the drugmaker expects that they would settle the Zyprexa-related federal claims, as well as similar Medicaid-related claims of states participating in the settlement. Separately, Lilly paid $15 million to settle a lawsuit last March filed by the state of Alaska (see here).

Lilly, however, continues to face a potential class-action lawsuit by third-party payors in federal court in New York (back story) and the presiding judge has urged the drugmaker to settle those cases or possibly face racketeering charges.